THE PRESIDENT: Thank you very much. Jerry likes to give a short
introduction. (Laughter.) I appreciate you letting me come by to visit
with you some, and I look forward to answering some questions you might
have. You can't come to a newspaper deal without answering questions.
(Laughter.)

First I want to thank you all for being part of the backbone of democracy.
You know, you can't have a democracy unless there is a free and vibrant
press corps. I sometimes remind people I may not like what you print, but
what you print is necessary to maintain a vibrant public forum where people
feel comfortable about expressing themselves. So thanks for what you do, I
appreciate it very much.

I also recognize that not all the press is located in the big cities in
America. I remember running for the United States Congress in 1978. I
came in second in a two-man race, by the way. (Laughter.) And I remember
-- I remember people telling me, whatever you do, you make sure you go
knock on the door of the rural newspaper. If you're interested in finding
out what's going on in the community, you not only go take questions, but
you listen to what the people are saying. And I've never forgotten that
lesson that good politics means paying attention to the people not only in
the big cities, but outside the big cities. It's one of the reasons I was
grateful to accept your invitation. I'm looking forward to being here.

A couple of thoughts on my mind. First, obviously, your businesses thrive
when the economy is good. And part of our job here in Washington is to
make sure the environment for entrepreneurship and small businesses and the
farmers and ranchers of this country is a strong environment. And this
economy of ours has overcome a lot. We've overcome a recession and an
attack, a national emergency, corporate scandals, a war, national
disasters. And we've overcome it, and the reason I say that is because the
statistics say it -- not just the politicians -- but statistics: 3.5
percent growth last year. The national unemployment rate as of today is
4.8 percent. That's lower than the average rate of the 1970s, 1980s,
1990s. Today we just learned that we've added 243,000 new jobs last month.
That's about 5 million jobs over the past two-and-a-half years. American
workers are defying the pessimists. Our economy is strong. Productivity
is up. Home ownership is up.

The fundamental question facing folks here in Washington and at the state
governments is: What do you do to make sure that the economy remains
strong? My philosophy can be summed up this way: The role of government
is to create an environment in which the entrepreneurial spirit flourishes.

I believe one of the reasons we're having the economic success we're having
is because we cut the taxes on the people. I believe that when somebody
has more money in their pocket to save, invest, or spend, the economy
benefits. The tax relief we passed is working. Parts of it are set to
expire. I'm reminding the American people that if the Congress doesn't
act, you're about to get hit with a tax increase you don't expect, and most
people don't want. So for the sake of economic vitality, to make sure this
economy continues to grow, and to make sure America is competitive in a
global economy, Congress needs to make the tax relief permanent.

Now, some will say, well, we've got to raise taxes in order to balance the
budget. That's not the way Washington works. Washington will raise your
taxes and figure out new ways to spend your money. That's how it works.

The best way to balance the budget is to keep pro-growth economic policies
in place. In other words, keep the taxes low so the economy grows, which
generates more revenues for the Treasury, and set priorities on the
people's money. I've submitted a budget to the Congress which keeps us on
track to cut the deficit in half by 2009.

Setting priorities is a difficult task for some in Washington. Every
program sounds worthwhile. Everybody's spending request is necessary. But
Congress needs to set priorities, needs to be wise about the people's
money. And if they need some help, they ought to give me the line-item
veto, and that way we can bring budget discipline, help keep budget
discipline in Washington.

The long-term budget challenge is -- it really has to do with mandatory
spending, what's called mandatory spending. That's code word for Social
Security and Medicare. Baby boomers like me are getting ready to retire.
My retirement age happens in 2008, by the way, which is aligned perfectly.
(Laughter.) I talked about the issue last year. I'm going to keep talking
about the issue. The job of a President is to confront problems -- that's
why you put me up here -- is to deal with problems, not to pass them on or
hope somebody else takes care of it.

And we have a problem with Social Security and Medicare. We've got a lot
of people retiring, and not enough people paying into the system. We've
been promised a lot of benefits, our generation, better benefits than the
previous generation. And so Congress needs to join me in setting aside all
the needless politics in Washington, D.C., to come together and to present
a solution to the American people, so we can say we've done our job. I'm
looking forward to working with Congress.

I said in the State of the Union, I want people at the table. I meant it.
I want Republicans and Democrats to come to the table, to come up with a
solution. Part of the solution is going to be -- the best way to describe
it is like an automobile, if you're speeding, you slow your car down to get
to the speed limit. You don't put it in reverse. We can fix the problem.
We can come together and show the American people we're capable of dealing
in a bipartisan way.

We also need bipartisanship when it comes to energy. I surprised some of
you and I'm sure some of my Texas friends here were somewhat surprised to
hear me say, we're addicted to oil, and that's a problem. (Laughter.) And
it is a problem. It's an economic problem -- economic/security problem.
When demand for fossil fuels goes up in India or China or elsewhere, it
affects the price of gasoline in Granbury, Texas, Jerry.

When I'm sitting around the Oval Office talking about national security
matters and somebody says, did you see what the Iranians said about
consequences, really what they're talking about, I guess, is energy. So
for national security purposes, we have got to become not addicted to oil.

And there are ways to do this -- really interesting ways, exciting new
technologies. And Congress and the administration needs to work together
to fund those new technologies. For example, it's possible to develop
energy from saw grass. We know we can develop energy from sugar and corn.
We're doing it in the Midwest. Those of you in the Midwest have seen the
advent of the 85 pumps. Well, we need to be able to get ethanol out of
other forms of biomass. And it's coming; we're close to some
breakthroughs. We want people driving cars from fuels grown in America.
That's what we want.

There's going to be hybrid batteries being developed that will enable you
to plug in your car or your truck, and you'll be able to drive the first 40
miles on electricity. That's coming. It's called plug-in hybrid vehicles.
That's going to be a part of making sure we're not addicted to oil.

Same on the electricity front. We can use wind power and electricity.
These are all coming to the market because of research. They're becoming
competitive forms of energy. We need nuclear power, in my judgment. It's
a renewable source of energy that doesn't create greenhouse gases. We're
spending a lot of money, by the way, on clean coal technology -- we've got
250 years of coal here in the United States of America. And we're
developing technology so that we can burn the coal cleanly. In other
words, we've got a comprehensive strategy to get us off oil, and looking
forward to working with both Republicans and Democrats to get this passed.

One other issue, then I want to talk about the war on terror right quick,
then I'll answer your questions. Probably wondering whether I'm going to
filibuster you. (Laughter.)

We've got to make sure our children have the skills necessary to fill the
jobs of the 21st century. If you're interested in talking about No Child
Left Behind, you can ask me about it. I'm a firm believer. I believe it's
changing public education for the better because we're measuring. And
we've got to use the same high standards that we've applied for reading in
the early grades for math in the middle years, junior high. That's what we
need to do.

And we need to spend research and development money at the federal level so
that we're always on the leading edge of technological change, that the
United States is the leader of the world, and that we've got to make sure
the research and development tax credit is a permanent part of the tax
code, recognizing two-thirds of research dollars comes from the private
sector.

One of the things -- I guess what I'm telling you is that I don't fear the
future for the United States, because we intend to shape the future with
good policies that keeps our economy flexible, entrepreneurial, that
recognizes that small business is the backbone of job creation, that honors
the contribution of our ranchers and farmers. I'm very optimistic about
the economic future of the United States, and I'm looking forward to
working with Congress to make sure the environment continues to encourage
job growth.

We're at war. I wish I could report to you we weren't at war; we are.
There's an enemy that still lurks, that would like to do serious harm to
the United States. Much of my thinking, the decisions I have made, all
revolve around that fateful moment when we got attacked. As concerned
citizens, I'm going to share with you a little bit about why I have made
decisions I have made. I'll be glad to answer any question you have along
those decisions.

But I vowed on September the 11th and after I would use all assets at our
disposal to protect you. That is, by far, the most important job of the
President, is to secure this homeland. There are lessons to have been
learned after September the 11th. One of them is that we cannot take our
security for granted. Listen, I understand that this is a different kind
of war, and there are some in our country that may not believe there is a
global war on terror. They may believe this is an isolated incident -- I
don't. I know we're at war with a jihadist movement that has got
strategies and tactics to back up those strategies.

So we cannot take our security for granted. And we must remain on the
offense, and we are. We're dismantling al Qaeda. It takes time. But
whoever is the President of the United States after me must always keep the
pressure on al Qaeda.

Secondly, we cannot let terrorists find safe haven. They found safe haven
in Afghanistan, where they could plot and plan and attack. And, therefore,
it's very important for the United States to deny safe haven.

Thirdly, when we see a threat, we've got to take it seriously, and never
allow it to materialize. The first choice of any President ought to be to
deal with issues diplomatically. And we dealt with the issue of Iraq
diplomatically -- Security Council resolution after Security Council
resolution after Security Council resolution, until 1441, when the world
spoke with a united voice that said to Iraq: disarm, disclose, or face
serious consequences. Saddam Hussein chose otherwise. He was removed from
power. And there's no doubt in my mind that the United States is more
secure, and the world is better off, without Saddam Hussein in power.

And now we must achieve a victory in Iraq by helping this country defend
itself, secure itself, and become an ally in the war on terror. The enemy
we face has got a powerful weapon. They can't defeat us militarily. They
do not have an ideology that is appealing to people. But they do have the
capacity to kill innocent life, and they're willing to do so, all
attempting to shake our will and cause us to leave the Middle East, so they
can find save haven from which to launch attacks. That is what they have
said. And as your President, it is important for me to see the world the
way it is, the realities of the world, not the way some would hope it would
be.

We've got a three-part strategy in Iraq, that on the one hand says there is
a -- that politics can help achieve our objective. And the Iraqi people
have said loud and clear -- not in one election, but three elections,
during the past year -- they want freedom. Eleven million people went to
the polls, in the face of terror and threats. There are some who are
trying to, obviously, sow the seeds of sectarian strife. They fear the
advancement of a democracy. They blow up shrines in order to cause this
Iraqi democracy that is emerging to go backwards, to not emerge. That's
what you're seeing on your TV screens. You're seeing the use of violence
to try to create strife. And there's no question, this is a period of
tension in Iraq.

The Iraqi forces responded well, however, which is the second part of our
strategy, and that is to let the Iraqis take the fight to the enemy. It's
up to Iraq to make the decision. They made the political decision, and now
it's up to them to make the decision to defend their own security against
those who would stop the march of democracy. And after the shrine bombing,
while there was no question about it, there was attacks, nevertheless, the
Iraqi forces moved. In 16 of the 18 provinces, there was relative calm.
And they preformed, by and large, in good fashion.

I know people in your parts of the world wonder how long the troops are
going to be there. They're going to be there so long as the commanders on
the ground say they're necessary to achieve victory. But they're coming
home as the Iraqis are more likely to be able to take the fight to the
enemy.

And the third aspect is economic development. That includes wise
reconstruction efforts, creation of a central bank, a sound currency, small
businesses. And if we don't lose our nerve, I'm confident we'll achieve
our objectives. And a democracy in the heart of the Middle East is going
to help lay peace.

Part of winning this war on terrorism requires alliances. America has got
a lot of friends in the war on terror. People understand the stakes. They
understand that the bombings around the world were an indication of the
plans that terrorists have for those of us who embrace freedom.

Obviously, you've been reading about the UAE issue. And I want to make a
comment on that, the port issue. I'm sure that the decision by DEPARTMENT
World was a difficult decision, to hand over port operations that they had
purchased from another company.

My administration was satisfied that port security would not have been
undermined by the agreement. Nevertheless, Congress was still very much
opposed to it. My administration will continue to work with the Congress
to provide a greater understanding of how these transactions are approved,
in other words the process, and how we can improve that process in the
future.

I'm concerned about a broader message this issue could send to our friends
and allies around the world, particularly in the Middle East. In order to
win the war on terror, we have got to strengthen our relationships and
friendships with moderate Arab countries in the Middle East. UAE is a
committed ally in the war on terror. They are a key partner for our
military in a critical region.

And outside of our own country, Dubai services more of our military --
military ships -- than any country in the world. They're sharing
intelligence so we can hunt down the terrorists. They've helped us
shutdown a worldwide nuclear proliferation network run by A.Q. Khan. UAE
is a valued and strategic partner. I'm committed to strengthening our
relationship with the UAE and explaining why it's important to Congress and
the American people.

Thanks for letting me come by -- be glad to answer some questions.

Yes, sir.

Q Governor Mike Rounds signed a bill this week banning almost all
abortions in South Dakota, sort of a frontal assault on the Constitution
(inaudible). I wonder if you agree with this process that the state has
taken.

THE PRESIDENT: As a former governor, I fully recognize that state
legislatures will vote on matters that they think expresses the will of the
local folks. Obviously, this bill he signed will work its way through the
court system, and maybe someday be given a fair hearing in the Supreme
Court. I don't know. I can't predict to you the course these legal
challenges will take. I can assure you, however, if it does make it to the
Supreme Court, the two people I nominated and who were approved were not
picked because of any litmus test. They will interpret laws based upon the
Constitution -- is what they'll do. And so I followed this in the
newspapers. I haven't talked to the Governor about it.

Q Mr. President --

THE PRESIDENT: Yes, I meant to call on you first. I'm sorry. (Laughter.)
Don't hold it against the man from South Dakota.

Q After the long introduction I gave you, I figured you owed me
something.

THE PRESIDENT: Yes, I do owe you one. (Laughter.)

Q This organization and its members are vitally interested in the
passage of association health plans. And we wonder what the possibilities
are for that.

THE PRESIDENT: I appreciate that.

Q And as the next questions come around, we'll just hand this microphone
around. So thank you.

THE PRESIDENT: Look what you did. Fine with me. No, don't worry about
it. I don't care. (Laughter.) I don't have to deal with the guy. I'm
fixing to leave. (Laughter.) I'm going to go meet with President Toledo
of Peru here after this.

The question is on association health plans. First of all, I fully
understand the pressures being put on small businesses because of rising
health care costs. And therefore good policy needs to address the rising
cost of health care. I've got some ideas for you. I'll get to AHPs in a
minute.

I think it's very important that there be more transparency in pricing in
health care. It's really the only industry, when you think about it, where
somebody else decides whether the price is worthwhile. The consumer isn't
directly involved in health care decisions, a third-party payer is. And so
there's really no interaction between the provider and the customer when it
comes to health care.

I'm a big believer in what's called health savings accounts because it puts
consumers in charge of health care decisions, and we strongly urge small
businesses to look at this vehicle.

Secondly, the health care is an inefficient industry -- when you really
think about what information technology has done to your business,
providing better productivity increases, as well as interesting challenges,
by the way. The same productivity increases haven't happened in health
care. I mean, you've got a guy writing down prescriptions by hand, and/or
files being written by hand, and doctors don't write so good anyway, which
leads to medical error, and inefficiencies.

So information technology, which we're now advancing here at the federal
level, in conjunction with providers throughout the country, to develop a
common vocabulary, so that eventually there will be electronic medical
records, with ample privacy protections available, will help wring out some
of the costs of health care.

Health care costs are driven by frivolous lawsuits. Doctors practice
defensive medicine in order to be able to withstand a court challenge. And
a lot of times that practice of defensive medicine isn't necessary, except
for legal reasons.

Secondly, lawsuits cause premiums to go up, which causes price to go up.
And, therefore, I'm a believer in medical liability reform at the federal
level -- I wasn't when I first arrived in Washington; I thought states
should handle it okay. But the problem is, is that it's estimated that
these lawsuits and defensive practice of medicine and the rising premiums
cause us to spend about $28 billion a year in additional federal money
through Medicaid and Medicare, veterans' benefits. And so I'm for medical
liability [sic] at the federal level.

Finally, AHPs makes a lot of sense. I am a strong backer. I believe small
businesses ought to be able to pool risk across jurisdictional boundaries,
so they can get the same benefits from larger risk pools that big companies
get. So I'm a believer in AHPs. I think we've got a pretty good chance
this year, I hope so, to get it out of the -- I know we got it out of the
House, we've got to get it out of the Senate. So part of a comprehensive
strategy for dealing with health care costs is to have AHPs as a part of a
health care vision.

Yes, sir.

Q Mr. President, I've got a follow-up question about the small business
-- keeping small business healthy, that you referred to. Postal delivery
rates are very important to community newspapers, much as you might know, I
believe, Bonnie Mullens, of the McGregor Mirror and Crawford Sun down in
your area. And we are --

THE PRESIDENT: She didn't call you to go after a subscriber, did she?
(Laughter.)

Q Postal reform, which has been going on in Congress for about 10 years,
was really pushed forward by a commission that you appointed, and it was
passed overwhelmingly by both Houses. And we have this bill going to
conference in April or May. There's some concern that the administration
may want to oppose this bill or veto it if it's so-called not favorable to
the federal budget. But there are things in that bill that are very
important to the newspaper industry, and part of that is the funding that
keeps rates fair -- because of some overpayment of military pensions --
that we don't think should be put on the taxpayers, the rate payers. So
we'd ask your support on behalf of us, and Bonnie Mullens --

THE PRESIDENT: Thank you.

Q -- to support that bill as it's in the Congress, if it comes to your
desk, sir.

THE PRESIDENT: As you know, we do support postal reform. And as you
accurately noted, we've got the process started, and we look forward to
working with Congress on an acceptable bill.

Frankly, this issue hasn't made it to my desk prior to me arriving at this
meeting. I'm mindful of the bill. I need to know more about the
particulars before I make you a commitment one way or the other.

Yes, sir.

Q Mr. President, what are our plans if civil war breaks out in Iraq?

THE PRESIDENT: Yes. Step one is to make sure -- do everything we can that
there not be one. Secondly, I believe the Iraqi people have made a choice.
It wasn't all that long ago that 11 million people went to the polls. It
may seem like an eternity, but that was last December that people defied
assassins, car bombers, threats and said, we want a democracy.

Secondly, the first real test for an interim government occurred when the
Shia's shrine was blown up, the holy site. And while there's -- as I said
earlier, there was -- no question there was violence and killing, the
society took a step back from the abyss. And people took a sober
reflection about what a civil war would mean.

I just got off of a teleconference with Ambassador Zal Khalilzad, as well
as General Casey. They're obviously concerned about sectarian violence,
the violence you see. They understand people are trying to create this
tension, this ethnic tension. But they were also pleased with the response
of the security forces. It wasn't perfect across the board. But,
nevertheless, in 16 of the 18 provinces I've mentioned that there was
relative calm. Most of the violence was in the Baghdad area. It's the
violence you're seeing on your TV screens.

So the purpose is to make sure that we continue to remind the interim
government that the people want democracy. One of the keys is going to be
to get a unity government up and running, a government that reflects the
diversity of the country. We talked about that today. We want the Iraqis
to make that selection, of course. They are the ones who got elected by
the people. They're the ones who must form the government.

But we are going to continue to remind them that the sooner they can get a
unity government up and running, the more confidence the people will have
in their future. So it's to take advantage of the desire of the Iraqis to
live in a peaceful world and encourage government to continue to respond to
fight off the desires of a few people, fight off those who are trying to
sow the seeds and get a democracy going.

It's very important for the people in the Muslim world to understand that
we understand there's a -- we're dealing with -- that we want them to have
a democracy that reflects their histories and their traditions. Iraqi
democracy doesn't have to look like the United States, nor should it. But
it's also important for people around the world to recognize that there are
such things as the natural rights of men and women.

That's what we're founded on here in America. We believe in the
universality of freedom. We believe people desire to be free, not just
Americans, but universally. And that faith -- at least my faith in the
natural rights of men and women, and the desire for people to be free was
expressed at the ballot box. And it's that powerful statement that I
believe will enable Iraq to develop a democracy.

A democracy in Iraq is important. It's important to deny safe haven to al
Qaeda. Zawahiri made it clear -- he's the number two man in al Qaeda --
that it's just a matter of time for America leaving. That's what he said.
And the reason why that was important for him to say because they wanted to
use Iraq as a place to plot/plan, as well to spread their jihadist, their
Islamist -- radical Islamic view. They're totalitarians. That's what they
are. And we've got to recognize them as such.

And so it's kind of long-winded answer to my belief that we will succeed,
and we must succeed. And the reason I say we will is because the Iraqis
want us to succeed. They want to succeed.

There's a lot of talk about Iran. A free Iraq will inspire reformers in
Iran. I believe the more women are empowered in the Middle East, like is
going to happen in Iraq, the more that will inspire others in the Middle
East to demand their freedom.

Now, if you don't believe freedom is universal, then I can understand
skepticism about what I just said. But I reject that notion that freedom
is only available to some of us. I believe liberty is universally desired.
And I know it's in our interest to help democracy spread.

I like to remind people about this historical parallel -- and I've used it
a lot. You've probably have heard it, so I beg your pardon for bringing it
up again. But it's important for me to connect the idea of laying the
foundation for peace with reality, and that reality is what we see in
Europe today. There were two major world wars in Europe in the 1990s -- I
mean, the 1900s. And today Europe is free and whole and at peace. And a
lot of that has to do with the fact that the nations of Europe are
democracies. Democracies don't war.

One of my best buddies in the international arena is Prime Minister Koizumi
of Japan. What's interesting about that is my dad fought the Japanese --
as did, I'm sure, your relatives, some of your relatives. And yet today, I
can tell the newspaper owners that I work with Koizumi to keep the peace.
Democracy has the capacity to turn enemies into allies and cause, kind of,
warring factions to come together. And it's hard work to help a democracy
get hold, particularly if you had just left -- lived under the thumb of a
brutal tyrant, somebody who'd kill you in a -- or get you killed in a
moment's notice.

Remember we discovered mass graves of a lot of people in Iraq. This guy --
Saddam Hussein was brutal for the people of Iraq. And there's a lot of
tension and a lot of rivalry. One of the big issues we're going to have to
deal with is to make sure that people don't take revenge outside the rule
of law. Militias that are kind of seeking revenge. And at any rate, I'm
just trying to share with you some of my -- the philosophical tenets of the
decisions I have made, and my optimism about the future, and my hopefully
realistic assessment about the necessity for us to achieve our objectives.

Remember this is a global war on terror. We've got a strong ally in
Pakistan fighting off al Qaeda. And Saudi Arabia and the Kingdom of Saudi
has committed itself to fighting al Qaeda. Lebanon is now becoming a freer
democracy, although we've still got work there to make sure foreign
influence is -- allow the Lebanese democracy to grow. Libya made a
decision to get rid of its weapons programs. And there's -- positive
things are happening. And they need to happen on a global basis because
this is a global war on terror.

Yes, ma'am.

Q Thank you, Mr. President. I'm from the state of Michigan. Many of
the things that you've mentioned today are affecting the state. We have a
high unemployment rate. And of course, much of our economy is dependent
upon the automobile industry.

THE PRESIDENT: Right.

Q General Motors is having problems with their health care plans, their
pension plans, and of course, the issue of gas is definitely one -- energy
conservation. I know the auto industry has asked the administration for
advice and for help in this problem. What role do you see the federal
government playing in terms of some of the industries in the country that
are partially problem-makers for your policies, as well for the people of
our state?

THE PRESIDENT: People have asked whether or not private companies that
have made pension promises should be relieved of their responsibility. And
my answer is, if you make a promise, you've got to keep it -- that if you
said, I -- Company X, Y, Z -- promise you this, it's up to the company to
make good on the promise. I think that's a very important principle to
state loud and clear.

One of the real issues that affects Michigan and people in Michigan is
trade. They're concerned about trade. They're worried that trade has only
benefited our friends but not our country. Let me take a step back and
tell you I'm a free trader. I believe it's very important for this country
to be opening markets. I'm confident that if the playing field is level,
that we can compete with anybody. And, therefore, one of the things I've
tried to assure the people of Michigan is that not only am I free trader, I
believe the rules ought to be fair. In other words, I would hope that the
American people say, just treat us fairly and we've got the confidence to
compete.

I know our farmers can compete. And for those of you who remember the
price of soybeans a couple of years ago, part of that is because we opened
up markets. If you've got cattle men and women in your area, buying your
newspapers, one of the things they constantly talk to me about is, get
those markets open, work with the Japanese to get that market open again.
We've got chicken growers -- I remember one of the first discussions I had
with Vladimir Putin in Russia was, you made some promises on our chickens,
open your markets like you said you would do.

My point is, is that opening markets is good, so long as we're treated
fairly. So I've constantly reminded the Chinese leadership that
intellectual property rights needs to be protected, your currency needs to
be floated, treat our people fairly. That's all we want. Our
manufacturers need to have a level playing field.

And so I fully understand Michiganders' concerns about the trade arena. I
would think it would be a mistake if we become a protectionist nation. I
thought so strongly about it that I put it in my State of the Union
address. I am worried about isolation and protectionism. To me it's a
lack of confidence in our ability to shape the future, and I think it
would be wrong economic policy. And so I will continue to work to open up
markets. But I fully am aware of the issues in Michigan.

Yes, sir.

Q Mr. President, I publish in the southern and eastern suburbs of Baton
Rouge, Louisiana.

THE PRESIDENT: There you go.

Q I know you've heard a lot of complaints from Louisiana, and seen a lot
of hands out. I would like to thank you for your personal interest, and
also for all the money. (Laughter.)

My Congressman, Richard Baker, came up with the idea of employing a federal
entity to buy out property in New Orleans, and sell it back into commerce
selectively. It seemed to have a political consensus in Louisiana from
both parties, it got to your office and was rejected.

THE PRESIDENT: Correct.

Q Can you talk a little bit about the problems that you see with
Richard's plan? And also you're still about to send billions more down to
us. How would you like to see that money handled, since you've been to us
10 times?

THE PRESIDENT: Well, thank you. First of all, I want to thank the people
of Baton Rouge, for being so generous to the evacuees. I want to thank my
fellow Texans for being generous to evacuees, and I'm sure people
throughout -- I'll bet you most of you are involved with communities that
said, welcome. And that was a fantastic gesture of kindness by the
American people, by the way.

I felt like there was a better approach to the housing issue. He's talking
about a good fellow, a really good guy, named Richard Baker, came up with a
plan that basically had the government buying the property, getting
developers to develop the property, and to the extent that money was not
recovered, the government would basically be the banker.

Working with the folks -- let me step back. Right off the bat, I knew it
was important for Louisiana to develop its own plan, not have the federal
government say, this is the -- impose a plan, but to have the folks in
Louisiana come up and develop a plan. We obviously have interfaced with
them, because as you recognize, in kind of a cavalier way, thanks for all
the money. (Laughter.) Well, not "cavalier." You made sure you mentioned
it, let me put it to you that way. (Laughter.)

And Louisiana had the Baker plan, but also was developing another plan, as
well, and one that we agreed to. Governor Blanco has put together a
citizens group of distinguished people, good, honorable people, who are
working closely with the group that Mayor Nagin put together, to develop a
plan that will take CDBG money, and money I've requested in the
supplemental, to basically have money that goes directly to the home owner.
I like that idea better than the government moving in and becoming the
bank, as opposed to the government providing money for individual home
owners to make decisions.

And the rules and the zoning laws attributable to that money are now being
developed. But it's a very good concept, in my judgment. It's very
important for Congress to make sure that the $4.2 billion, I think it was,
request in the supplemental go to Louisiana, as I said down in New Orleans
the other day.

Step one in the recovery in New Orleans has got to be to make sure that the
levees are strong enough -- equal to or better than pre-Katrina -- in order
for there to be confidence -- confidence for the market, confidence for the
home owner to be able to rebuild in certain parts of New Orleans.

Secondly, it's important that as the levees are rebuilt and people gain
confidence, that there be a rational development plan in place. I think a
lot of taxpayers really don't want to pay money for people to rebuild in an
area that's likely to be flooded again. And the people of New Orleans
understand that, and the people of Louisiana understand that. That issue
is being addressed.

Thirdly, it's very important that the federal government rebuild the
infrastructure that we're obligated to rebuild in a timely fashion.
Incredibly enough, the Slidell bridge, as I understand it, because of
proper incentives was built in record time, under budget. That may be a
contradiction in terms when you hear a federal official saying "under
budget, on time," but nevertheless, I believe that's what the Governor told
me.

And so there is a comprehensive strategy in place that I'm comfortable
with. Details need to be worked out, more details about dealing with the
flood plain issue, and how high the houses have to be rebuilt if people
choose to rebuild there. I like the idea of funding people, of letting
them make the decision.

By the way, Mississippi -- and I don't know if we've got any folks from
Mississippi here -- but if you've ever been to the Gulf Coast of
Mississippi since the storm, you'll know what I'm saying, it looked like a
bomb blast. It just leveled, absolutely wiped out a lot of -- a lot of
homes and property and some lives along there. And they developed a plan,
too -- their own plan.
Louisiana is different from Mississippi. They came up with a Mississippi
plan that has been funded. And they are now in the process of saying to
homeowners, we're helping you rebuild your lives. I went to a home where
the guy building -- rebuilding it on the beach. I forgot how high he's got
it up, but it's high enough to meet new standards, new building standards.

Debris removal in both locations is -- you just can't imagine how much
debris was there. As you know, I'm not too poetic to begin with, so I'll
probably not be able to describe it properly. Let me just say, it's a lot.
(Laughter.) I mean, a whole lot. And Mississippi has moved a lot of it
off private and public land -- I'm probably telling you more than you want
to know.

I'll just give you an interesting public policy dilemma. When we first got
down there, the government will remove debris off public property, but not
private -- will pay to remove debris off public property, but not private
property. The simplest way to explain why not is you start moving debris
off private property, and the guy shows up and says, where's my
million-dollar necklace? And so therefore, there needs to be kind of a
held harmless statute, or held harmless agreement with local authorities.
And so we've devised a perfectly legal way of saying that if you declare a
health and safety hazard for particular blocks, then government money will
pay to clean up the land. A lot of Mississippi has been cleaned up because
a lot of the local folks decided to take that tack.

Now, the problem in Louisiana, as far as debris clean up, is that -- like
in the lower Ninth, a lot of people haven't come back to their homes yet to
see the devastation. They've been displaced around the country. And until
people are able to come home, and until people are clear about what the
rules will be and the funding mechanism will be, it's going to be -- the
debris removal will be slow. We've done a pretty effective job of cleaning
debris off the public right of ways, public lands, but not off the private
lands. And so that's yet another deterrent to economic development.

So all this is coming together. My point -- the funding is coming
together; the levees are coming together; the rules about reconstruction
are coming -- or rebuilding are coming together; and the debris removal,
albeit slow at this point in time, waiting for people to inspect their
houses, will probably accelerate when people realize there's a way forward
-- long answer to a complicated problem.

We've got $100 billion that has been allocated for the region, which is
going to create some interesting opportunities and further problems. One
is going to be labor. People are going to be rebuilding down there a long
time. If you're interested in making a living, go down there and there
will be a job. And we want the first people hired, of course, to be
Mississippi people and Louisiana people. It's a great opportunity, by the
way, for small business development. I'm a believer -- as you can tell,
I'm an optimistic person. I believe that out of this terrible harm and
grief is going to come a vibrant part, a vibrant economy.

You know, sales taxes receipts are I think almost equal to what they were
last year in Mississippi. It's amazing, isn't it? There's great
resiliency to the American people.

Anyway, thanks for asking. Yes, sir.

Q I'm from Aurora, Colorado. In our town a teacher was suspended for
remarks critical of your State of the Union message, made the talk shows,
et cetera -- compared you to Hitler and -- actually, I've heard the tape
and he didn't, he said, "Hitler-esque," but it's not --

THE PRESIDENT: He's not the only one. (Laughter.)

Q And it's not the content that my question is about. My question is
about your sense of the free speech right in the classroom or in public to
criticize you without being considered unpatriotic.

THE PRESIDENT: Yes, I think people should be allowed to criticize me all
they want, and they do. (Laughter.) Now what are you all laughing at over
there? (Laughter.) Don't cheer him on. (Laughter.)

Look, there are some certain basic freedoms that we've got to protect. The
freedom of people to express themselves must be protected. The freedom of
people to be able to worship freely. That freedom is valuable. I tell
people all the time, you're equally American if you're a Christian, Jew, or
Muslim. You're equally American if you believe in an Almighty or don't
believe in an Almighty. That's a sacred freedom.

The right for people to express themselves in the public square is a
freedom. Obviously, there's limitations. If, for example, someone is
inciting violence, or the destruction of property, or public -- causing
somebody harm. But the idea of being able to express yourself is a sacred
part of our society. And that's what distinguishes us from the Taliban.
And that's important for Americans to understand.

We're in an ideological struggle. And one way for people to connect the
ideological struggle with reality is to think about what life was like for
people under the rule of the Taliban. If you didn't agree with their view
of religion, you were punished. If you tried to send your little girl to
school, you were punished. These people have a backward view. I don't
believe -- I believe religion is peaceful. I believe people who have
religion in their heart are peaceful people. And I believe these people
have subverted a great religion to accomplish a political end.

So thank you for bringing that up; I appreciate it. People say to me, my
buddies in Texas, how do you handle all this stuff? After a while, you get
used to it. (Laughter.) But you have to believe in what you're doing,
see. You have to believe in certain principles and beliefs. And you can't
let the public opinion polls and focus groups, one, cause you to abandon
what you believe and become the reason for making decisions.

My job is a job where I make a lot of decisions. And I decide big things
and little things. And there are certain principles to decision making.
You make decisions -- you know, you have to make a lot of decisions. And
you don't put your finger in the air to figure out how to make a decision.
And neither should the President of the United States. And you have to
know what you believe.

Good decision making rests on certain basic principles. I believe in the
universality of freedom. I believe democracies lead to peace. I believe
people ought to worship freely. I do believe there's an Almighty God that
has spread freedom -- making freedom available for everybody. I believe in
private enterprise. I believe in free enterprise. I believe in high
standards in education. These are basic beliefs that I'm not going to
change.

And I know some would like me to change, but you can't be a good decision
maker if you're trying to please people. You've got to stand on what you
believe. That's what you've got to do, if you're going to make decisions
that are solid and sound. And I understand some of the things I've done
are unpopular. But that's what comes with the territory.

If you're afraid to make decisions, and you only worry about whether or not
people in the classroom are going to say nice things about you, you're not
leading. And I think we've got to lead. We've got to lead to spread the
peace, we've got to lead to protect this country, and we've got to lead to
make sure we're the preeminent economic power, so our people can benefit.

Q Who do you think the biggest threat is: Iran, North Korea, or China?

THE PRESIDENT: Interesting question. The biggest threat to American
security, Iran, North Korea, or China. Why did I call on you? (Laughter.)
It would be an Oklahoma guy, you know? (Laughter.)

The biggest threat to American security, short-term, is al Qaeda. They
would like to attack us again. I think about al Qaeda and their potential
to attack all the time -- all the time. That's what you want your
President doing. My job is to basically insulate people from some
concerns. You don't risk capital if you're worried about an attack coming
tomorrow. You don't go confidently about your business if an attack is
right around the corner. I understand that. But I think about it a lot.
So step one -- I'm changing your question; would you please order the
threats -- al Qaeda.

I said in an early speech there was an axis of evil, and it included Iran
and North Korea. I said that I think, help me out here, April -- 2002
perhaps? State of the Union. If it's not 2002, it's April's fault,
because she nodded her head. (Laughter.) Relatively early in my
presidency.

I did that because I'm concerned about totalitarian governments that are
not transparent, that have stated their intentions to develop nuclear
weapons. One of the real dangerous threats, of course, is the nexus of
terrorist groups, non-state groups that get a weapon of mass destruction,
which is their stated objective. And so I'm concerned about that.

I'm concerned about -- I would say they're equal, Iran and North Korea, as
for a security threat, because any time there's a non-transparent regime
without a free press to hold people to account, it creates an
unpredictability in the world. The Iranian President has stated his desire
to destroy our ally, Israel. So when you start listening to what he has
said, to their desire to develop a nuclear weapon, then you begin to see an
issue of grave national security concern.

And, therefore, it's very important for the United States to continue to
work with others to solve these issues diplomatically -- in other words, to
deal with these threats today. And we are. We've got the EU3 -- which is
Great Britain, France and Germany -- diplomatic lingo, sorry -- are
basically taking the position for the free world to the Iranians, that
said, no nuclear weapon, and no knowledge about how to make a nuclear
weapon.

I talked to Vladimir Putin this week -- or the Foreign Minister from Russia
this week, about making sure that we're -- Russia says the same thing. In
other words, we want the Iranians to hear loud and clear that the world is
speaking with one voice when it comes to their capacity to develop a
nuclear weapon. Remember now, the reason we are where we are is because
they had agreed to international norms, and then were caught not adhering
to the international norms. In other words, they basically tried to pull
one over on the world. And to me, that's a warning signal we've got to
take seriously.

Korea, the issue is one in which we tried to alter the relationship with
the Koreans to be more than just the voice of the United States saying to
the Koreans the same thing. And so we've now got China, South Korea,
Russia, Japan and the United States involved in what's called the six-party
talks.

Ultimately, I think it's very important for the people in those countries
to be able to live in a free society. If you believe liberty is universal,
then you would hope liberty would spread to those countries, as well.

The Chinese -- you know, our relationship is a very interesting
relationship with the Chinese. It's an amazing country, in many ways.
It's a country that has got -- it's got to create 25 million new jobs a
year to stay even. Think about that. It's a country that has chosen the
path, by and large, of markets and enterprise. They are an economic issue
for us, and that's why -- we've got a huge deficit with them. And
therefore it's very important for the government to, on the one hand,
reject protectionism, but on the other hand, insist that their market is
open and it be traded freely and fairly, like I answered the lady from
Michigan. I don't view -- China is a more -- China is a strategic partner
when it comes to trade, for example. And I can't say that about the other
two countries. And so the relationship is different. It's a different
relationship.

He's giving me the hook, because I've got to go see President Toledo, but
anyway. Yes, ma'am.

Q I represent the Tullahoma News, from Tullahoma, Tennessee. I have the
very best job there. I'm the wife of the publisher.

THE PRESIDENT: I don't know if Laura would say the same thing.
(Laughter.)

Q But I wanted to know what you understand the complaints to be about
your No Child Left Behind policy, and if you acknowledge those complaints
as any weaknesses to the policy? How effective do you think it is in spite
of that?

THE PRESIDENT: Good question. I'm glad you brought up No Child Left
Behind. The complaint is, that how dare the government cause us to measure
-- one of the complaints -- too much testing, you know. I heard that when
I was the governor of Texas. Jerry didn't editorialize there, I'm sure.
(Laughter.) Maybe you did.

You know, how dare you test people who don't speak English as a first
language. My answer to those concerns is that, how do you know if you
don't test? How can you possibly tell whether a child is learning to read
and write if you don't measure? When I was the governor of our state, I
was deeply concerned about a system where people would come to me and say,
you know what, we're getting kids in college that are not very literate.
This kind of, just, social promotion was the culture and the norm.

If I were a newspaper owner, I'd want to make sure people could read. And
one way to make sure people read is to measure early whether or not people
can pass a test. I've heard people say, all we're doing is teaching the
test; you're causing people to teach the test. And my answer to that is,
teaching a child to be literate will enable that child to pass the test.
There's something fundamental about literacy.

Secondly, people said, we believe in local control of schools, and the No
Child Left Behind Act is not local control of schools. I strongly
disagree. I believe in local control of schools. The No Child Left Behind
Act said we're spending a lot of federal money, particularly on Title I
students, show us whether or not the money is being well spent.

We didn't say, here's the curriculum you must use, here are the class sizes
you'll have. We didn't say, we're going to design the test on your behalf.
I fought off a national test, because I believed a national test would
undermine local control of schools. All we said was, measure, and post
your scores for everybody to see, and that you've got to be meeting a
higher standard. In other words, we're holding people to standards. So I
believe the No Child Left Behind Act honors local control of schools.

One of classic debates that takes place at the local level is what
curriculum to use. I'm sure some of you have been through the classic
reading curriculum debates. They raged hot and heavy in the state of Texas
for a while. And you'd have this side would be yelling at that side. And
one way to make sure that your curriculum works is to measure. If a child
is passing reading by using this curriculum, and another child is not
passing reading when they use another curriculum, it provides a useful tool
for the local newspaper, for example, to say, we told you so, the
curriculum is not working; or we told you so, the curriculum is working.

There's got to be accountability in the public school system. If you do
not diagnose a problem, you can never solve the problem. And one of the
things about No Child Left Behind which is important is that when we
diagnose a reading problem early, there is supplemental service money to
help that child be brought up to speed. That's why it's called No Child
Left Behind. We believe every child can learn -- every child. And,
therefore, this is a program that says we want accountability for the
taxpayers' money. We'll provide extra help early on when we find a child
who needs extra help. And it's working. That's the other thing that I
would tell people.

How do I know? Because we measure. There's an achievement gap in America
that is not right. When you measure at the 4th grade, Anglo kids did fine,
African American and Latino kids didn't. And that's not fair. And it's
not right. And so we've essentially ended social promotion in the early
grades, and said we're going to correct problems. And it's working because
that gap is narrowing. And the reason I can say that is because we
measure.

Interestingly enough, when you kind of compare measurements internationally
in math and science or math, we're doing fine in the 4th grade. We're
falling off in the 8th grade. And so what I want to do is to apply the
same rigor for reading that we did in the early grades to math in junior
high, so in the 8th grade we get those scores and kind of lay that
foundation for the sciences and the engineering -- the physicists, so we
can compete.

I'm a strong believer in No Child Left Behind. My Secretary of Education,
my good buddy, Margaret Spellings, who helped me put a similar program in
place in the state of Texas is now the Secretary of Education. She's
obviously listening to complaints about certain aspects of AYP. But we're
not going to undermine the basic tenet that says we believe in high
standards, we believe every child can learn, and we're going to measure.
And when we see the status quo is unacceptable, we'll challenge the status
quo. That's what you need to. And I'm sure you are doing that. It ought
to be unacceptable to opinion makers when you find illiteracy. And you
ought to demand change -- not only for your own self interest, but for the
sake of this country. And so thanks for asking the question.

I've got to go. Listen, I'll be a diplomatic problem if I don't get over
there on time. (Laughter.) I'm honored you would have me. Thanks for
letting me come by and visit with you. God bless. (Applause.)